The stories and commentary that have emerged from the recent federal parliamentary inquiry into the operation and effectiveness of the Franchising Code of Conduct have been surprising to me.
Why? Because in so many ways, the reality of our approach as a franchisor at Ray White is a world away from the general perception of a franchise model.
It starts when offices open their doors for the first time. While most franchised models impose a joining fee, we don’t. In fact, we often contribute to the start-up costs to get our new business owners off on the right foot. On average, we invest more money and time in the first two years of a new franchise agreement than we receive in revenue, and feel very comfortable taking a long-term view on shared success and profitability.
The differences continue during the term of the franchise agreement. We have all read the terrible stories of some franchisors profiteering by mandating suppliers at inflated prices. Ray White instead looks to use its scale to effectively bulk buy, allowing our offices access to products and services at a fraction of the cost they would otherwise. By limiting overheads, we know our businesses have a better chance to thrive.
Many commentators allege that the inquiry illustrates that franchisors aren’t interested in the profitability of its members. We are extremely proud of the work done by our Profit Team, a group of highly talented accounting and finance professionals who provide specialised advice and information that is real-time and benchmarked across the group.
We are part of an industry that can be very tough at times, and there can not, nor can there ever be, any guarantee of financial success for either franchisor or franchisee. However, our Profit Team ensures our business owners are equipped to make the best financial decisions possible.
Even when an agreement ends we are different. Most other franchise groups, including many of those in our own industry, charge break fees and/or impose other penalties if a business owner wants out. At Ray White, if we’ve exhausted every other option and someone wants to leave our group, we won’t take their premises or their database, their phone numbers or their digital footprint and we won’t enforce a restraint of trade. There’s no point for either party in anything other than the most amicable of endings.
Of course, there are times that we make decisions that disappoint some of our members. Decisions that we believe will benefit the long term interests of our network and protect what it stands for. Pleasing everyone in a franchise group all the time is both inherently impossible and not necessarily in everyone’s long term interests.
And so nothing irks us more than people suggesting that we are in the business of selling franchises! Not so – we are in the business of providing leadership to our members, enabling them to chase their potential and build the best possible business to provide for themselves and their families.
The underlying premise of Ray White is that mutual success will come from support and freedom, not control or inequity. That people will thrive when they are given the opportunity to develop ‘their’ business, and to take pride in what they provide their staff and their customers. Every business owner is unique, they will operate their business based on what is important to them.
Trying to put each business owner in a straight-jacket conflicts with the inherent purpose of the franchise concept, and serves the business owner poorly.
Being a fourth generation business, our family is the custodian of what has been and will be created. No-one really owns it, except in the most literal of senses. As custodians, our duty is to provide an environment for current and future generations of Ray White members to thrive and make a wonderful contribution to their families, customers and communities.
And the reality is, it’s a long way from how the duty of the franchisor is perceived.
Ray White Group